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Compliance Challenge IRAs and minimum distributions

WASHINGTON (2/20/09)--Are consumers with an Individual Retirement Account (IRA) at a credit union required to take minimum distributions from the account if they reach retirement age this year? No, says the Credit Union National Association’s (CUNA) Compliance Challenge team. Though account owners were previously penalized for not taking out the correct required minimum distribution (RMD) annually at age 70.5, a new law--the Worker, Retiree, and Employer Recovery Act of 2008, signed last year--changes the requirement by suspending the required minimum distributions from qualified retirement accounts including 401(k) plans, 403(b) plans and IRAs for 2009. However, account holders are required to take the RMD scheduled for 2010 by Dec. 31, 2010. IRA holders who reached age 70.5 last year also are required to take their RMDs by April 1 or face excise taxes. The taxes for 2009 will be waived. Credit unions are encouraged to make their members aware of the change, according to CUNA.